Lotus Notes versus Microsoft Redux

The biggest battle in the history of the channel harkens back to the
way Microsoft essentially destroyed Lotus Development Corp., by first
bundling productivity applications together in Microsoft Office and
then tightly coupling its Microsoft Outlook client with the Microsoft
Exchange messaging platform.

The first move essentially eliminated the viability of the Lotus
1-2-3 spreadsheet as Microsoft Excel gained supremacy as part of
Microsoft Office. The second onslaught laid waste to the cc:Mail and
Lotus Notes franchises, which subsequently drove Lotus into the arms of
IBM. Later, Microsoft would deploy the same playbook against Netscape,
which in turn led to the Department of Justice antitrust case against
Microsoft.

Since then IBM has been steadily nursing the Lotus Notes franchise
back to health and for the first time in more than 10 years it’s
starting to look like Lotus Notes might actually be going on the
offensive in terms of competing with Microsoft.

IBM is claiming that it is now signing up roughly 200 Microsoft
partners a month to sell the latest iteration of the Notes franchise,
which today is called Lotus Foundations. The opportunity that IBM is
trying to exploit is twofold. The first concerns missteps made by
Microsoft that has left partners with nothing to sell while they wait
for Windows 7 and the arrival of Microsoft Exchange 2010. Customers
have summarily rejected Windows Vista, which leaves little opportunity
to sell a Microsoft Office upgrade. And nobody really wants to upgrade
their messaging platform when they all know that Microsoft Exchange
2010 will be out sometime in the next six months. Taken together, this
creates a window of opportunity for IBM to at least get a hearing about
selling Lotus Foundations on top of a new self-managing Linux server
implementation.

The self-managing capability of Lotus Foundations is cornerstone on
which IBM is resting the second element of it renewed offensive against
Microsoft. Lotus Foundations is based on Linux server technology that
IBM picked up when it acquired Net Integration Technologies (Netix) in
early 2008. Netix built a Linux distribution that came integrated with
a host of autonomic tools that made the platform self-healing. Any time
there is a problem with the server, the entire system just reboots
itself and restores all the original settings automatically. Similarly,
every time a patch is delivered, the system reboots a whole new
instance of the operating system, versus trying to layer in a patch on
top of a running application.

In effect, what IBM has done is created the ideal platform for
delivering managed services that can not only be remotely managed, but
requires very little technical support because the system heals itself.
Little technical support equals more profitability for the partners.

IBM bundles its Symphony suite of productivity applications with
Lotus Foundations, but customers can opt to continue using Microsoft
Office on their clients in conjunction with the Lotus Foundations
messaging platform. In the future, IBM is expected to bundle unified
communications applications with Lotus Foundations as well and don’t be
surprised when IBM starts to use Lotus Foundations as a platform for
delivering other software offerings, such as its Tivoli offerings, via
the Lotus Foundations appliance model.

Customers can also opt to deploy virtual machine software from
VMware on top of the Linux server, which then allows them to deploy
Windows server and related applications on top of the more stable Linux
server platform created by IBM.

IBM claims that a Lotus Foundations is the manifestation of a new
business model in the channel that is not based on offering technical
services for when Windows software fails. Instead, IBM is arguing that
self-healing software will allow partners to support more customers
than they can today because not only do they not have to roll trucks to
customer locations to fix things when they inevitably break, they can
also keep a much higher percentage of their services revenue as pure
profit.

While IBM has captured the attention of the channel with Lotus
Foundations, they clearly have a long way to go in terms of regaining
momentum with customers. But with large numbers of hungry partners
looking to sell customers an offering that is easy to manage that
includes a built-in recurring revenue model around managed services,
don’t be too surprised when IBM starts reporting to some significant
market share gains in 2010.